Compliance and Fraud, Waste,
and Abuse Awareness Training
First Tier, Downstream, and Related Entities
1
Course Outline
Overview
Purpose of training
Effective Compliance program
Definition of Fraud, Waste, and Abuse
Laws related to Fraud, Waste, and Abuse
Examples of Fraud, Waste, and Abuse
How to report noncompliance and Fraud, Waste,
and Abuse
Additional resources
Confidential
2
Overview
 The Centers for Medicare and Medicaid Services (CMS)
spends over $756 billion a year providing medical and
pharmacy benefits to individuals.
 Medica has a relationship with CMS to provide medical and
pharmacy benefits to individuals.
 Medica provides these medical and pharmacy Medicare
benefits as a contracted Medicare Advantage Organization,
Medicare Cost Plan and a Part D Plan Sponsor.
 Medica also has a relationship with the MN Department of
Human Service (DHS) (and indirectly with CMS) to provide
medical, pharmacy, and dental benefits to certain residents
of the state of MN. Medica provides these benefits as a
contracted Medicaid Managed Care Organization (also
referred to as a “prepaid health plan”).
Confidential
3
Overview
Medica, as a Plan Sponsor of Medicare and
Part D plans, and as a Managed Care
Organization for Medicaid Plans, must
implement an effective compliance program
to prevent, detect, and correct
• fraud, waste, and abuse (FWA); and
• noncompliance with the CMS and DHS program
requirements.
Confidential
4
Overview (cont.)
 Regulations require that Medica’s compliance
program include seven core elements.
1. Written policies and procedures
2. Designation of a Compliance Officer and
Committee
3. Training and education
4. Effective lines of communication
5. Well-publicized disciplinary standards
6. Routine monitoring and identification of risks
7. System for prompt response to issues
Confidential
5
Purpose of these training materials
CMS regulations require Medica to establish,
implement, and provide effective training and
education to any entity that it contracts with to
provide administrative or health care services for
Medicare eligible individuals under a Medicare
Advantage (MA) or Part D program.
The CMS regulations define these contracted
entities as first tier, downstream, and related
entities.
Confidential
6
Purpose of these training materials
Definition of Contracted Entities
 First Tier Entity
• Any party that enters into a written arrangement, acceptable to CMS, with a
MA or Part D plan sponsor or applicant to provide administrative services or
health care services for a Medicare eligible individual under the MA or Part
D programs.
 Downstream Entity
• Any party that enters into a written arrangement, acceptable to CMS, with
persons or entities involved with the MA or Part D benefit, below the level of
the arrangement between a MA or Part D plan sponsor and a first tier entity.
These written arrangements continue down to the level of the ultimate
provider of both health and administrative services
 Related Entity
• An entity that is related to the Plan Sponsor by common ownership or
control and performs some of the Plan Sponsor’s management functions
under contract or delegation; furnishes services to Medicare enrollees under
an oral or written agreement; or leases real property or sells materials to the
Plan Sponsor at a cost of more than $2,500 during a contract period.
Confidential
7
Purpose of these training materials
 This training must be completed by 12/31/2011 and
annually thereafter. Your organization must maintain
records of this training. Records must include:
•
•
•
•
Materials used for training,
Dates training was provided,
Methods training was provided,
Training logs identifying trained employees
 Medica, CMS, or agents of CMS may request such
records to verify that training occurred.
Confidential
8
Purpose of these training materials
 If you or your organization has contracted with other
entities (downstream entities) to provide health or
administrative services to Medicare beneficiaries
covered by Medica, you must provide this training
material or training material that complies with CMS
regulations to your subcontractor or downstream entity.
 You must ensure records of training are maintained by
the subcontractor and any other entity that it may have
contracted with to provide health or administrative
services.
Confidential
9
What does an Effective Compliance Program
Look Like?
 Compliance programs are framed on the seven core
elements of an effective program.
 Medica implements the seven core elements through
collaboration with the Corporate Compliance department
and the business unit compliance leads throughout the
organization.
 If Medica delegates any of its compliance activities to an
entity that provides administrative or health services to
Medicare or Medicaid members, effective oversight of those
delegated activities must occur.
Confidential
10
Element 1 of an Effective Compliance Program
Written Standards of Conduct
and Policies & Procedures
that:
1.
2.
3.
4.
Describe an organization’s
commitment to comply with all
Federal and State standards
Provide guidance to employees
and others on dealing with
potential compliance issues
Describe expectations as
embodied in the standards of
conduct
Are easily accessible to vendors
and providers
Confidential
You should know that:
 Medica’s Standards of Conduct booklet and
corporate policies can be found on
Medica.com.
11
Element 2 of an Effective Compliance Program
Designation of a Compliance
Officer and Committee that is:
1.
2.
3.
4.
Accountable to senior management
Employed by the organization
Periodically reports to the governing
body
Responsible for oversight of the
compliance program
Confidential
You should know that:
 Medica is committed to complying with
CMS regulations and preventing
detecting and correcting FWA.
 Medica’s Vice President of Compliance
and Privacy and Medica’s Medicare
Compliance Officer report compliance
activity to the Board of Director’s Audit
Committee every quarter.
12
Element 3 of an Effective Compliance Program
Training and Education that:
1.
2.
Is provided to employees including,
the chief executive and managers;
governing body; and entities
Medica partners with to provide
administrative or health services to
Medicare members.
Must occur at least annually and as
part of orientation of new
employees; governing body
members; and entities that Medica
partners with to provide
administrative or health services to
Medicare and Medicaid members.
Confidential
You should know that:
 Medica requires first tier, downstream, and
related entities to take general compliance
and FWA Awareness training as part of
becoming a new partner with Medica and
annually thereafter.
13
Element 4 of an Effective Compliance Program
Effective Lines of
Communication must
exist:
1.
2.
3.
Between the compliance
officer, compliance committee,
employees, managers and
governing body
That maintain confidentiality
and allow anonymity if desired
(e.g. telephone hotlines or
mail drops)
That are available to entities
that Medica partners with to
provide administrative or
health services to Medicare
and Medicaid members
Confidential
You should know that:
 You are encouraged to discuss any
suspected compliance issue with
appropriate individuals within your
organization.
 Any suspected noncompliance or fraud,
waste and abuse should be reported to your
Medica business contact at:
•
•
•
•
952-992-1736
1-800-458-5512 (option 1, option 8, ext. 28478
Fraud and Abuse page on Medica.com
Medicare compliance related concerns
should be reported to 952-992-3400 or 1-888906-0972
 If you prefer to remain unknown call
Medica’s Integrity Line: 1-866-595-8495
 No business partner will suffer any penalty
or retribution for reporting in good faith any
suspected misconduct or noncompliance.
14
Element 5 of an Effective Compliance Program
Well-Publicized
Disciplinary Standards
that:
1.
2.
3.
Articulate expectations for
reporting compliance issues
and assist in their resolution;
Provide for timely, consistent,
and effective enforcement of
the standards when noncompliance or unethical
behavior is determined; and
Encourage good faith
participation in the compliance
program
Confidential
You should know that:
 Medica may alter or terminate business
relationships as a result of a violation of
Medica’s Standards of Conduct.
 No business partner will suffer any penalty
or retribution for reporting in good faith any
suspected misconduct or noncompliance.
15
Element 6 of an Effective Compliance Program
Routine Monitoring and
Identification of Risks
by:
1.
2.
3.
4.
Conducting internal monitoring
and auditing
Obtaining external audits when
appropriate
Auditing and monitoring entities
that Medica partners with to
provide administrative or health
services to Medicare or Medicaid
members
Evaluation of overall
effectiveness of the compliance
program
Confidential
You should know that:
 Proactive monitoring of business practices
by management is vital to identifying
potential compliance issues.
 Medica has an Internal Audit department
that assesses the adequacy and
effectiveness of Medica’s financial controls.
 Corporate Compliance also has an audit
function that assesses Medica’s compliance
with State and Federal laws.
16
Element 7 of an Effective Compliance Program
System for Prompt Response to
Issues that:
1.
2.
3.
4.
Acknowledges issues as they are raised
Requires appropriate investigation of potential
compliance problems
Corrects such problems promptly and
thoroughly to reduce the potential for
recurrence
Includes procedures to voluntarily self report
potential fraud or misconduct to CMS or its
designee or to DHS.
You should know that:
 Medica is required by law to respond timely
to incidents of noncompliance. Examples
include:
- Privacy incidents
- Inquiries from regulators
 You are encouraged to inquire about any
Medica compliance issue you may have
reported. Call any of the following to
discuss questions you might have:
•
•
•
Medicare Compliance concerns call: (local)
952-992-3400 or (toll-free) 1-888-906-0972
Corporate Compliance concerns for any nonMedicare related issues at 952-992-2099, or
anonymous at Medica’s Integrity Line 1-866595-8495
Special Investigations Unit (SIU) for any
Fraud, Waste or Abuse concerns at 952-9921736 or (toll free) 1-800-458-5512
 No business partner will suffer any penalty
or retribution for reporting in good faith any
suspected misconduct or noncompliance.
Confidential
17
Oversight of compliance activities
Compliance Oversight

Regulations state that Medica
is ultimately responsible for
oversight of any compliance
activities delegated to entities
that Medica partners with to
provide administrative or
health services to Medicare
members.
Confidential
You should know that:
 As an entity contracted with Medica, you are
responsible for maintaining a relationship
that supports compliance with CMS
regulations. The effectiveness of the
compliance program is impacted by how
you manage your business relationship with
Medica.
 Examples of how Medica may establish
oversight include:
• Requiring attestations to evidence
compliance with specific activities
• Requesting copies of training logs
• Cooperation with auditing and
monitoring activities
18
Purpose of a Compliance Program

The purpose of a compliance program is to prevent,
detect, and correct:
1. Noncompliance with CMS’ and DHS’ program
requirements; and
2. Instances of Fraud, Waste, and Abuse
 Examples of noncompliance with CMS’ and DHS’
program requirements includes:
• Not cooperating with CMS or DHS auditors
• Untimely submission of data to CMS or DHS
• Violating member privacy
 The following slides are designed to train you on what
types of fraud, waste, and abuse you may encounter.
Confidential
19
What are Fraud, Waste and Abuse?
 Fraud: an intentional act of deception, misrepresentation or
concealment in order to gain something of value. Examples include:
•
•
•
Billing for services that were never rendered
Billing for services at a higher rate than is actually justified
Deliberately misrepresenting services, resulting in unnecessary costs to the
Medicare or Medicaid programs, improper payments to providers or
overpayments
 Waste: over-utilization of services (not caused by criminally negligent
actions) and the misuse of resources
 Abuse: excessive or improper use of services or actions that are
inconsistent with acceptable business or medical practice. Refers to
incidents that, although not fraudulent, may directly or indirectly cause
financial loss. Examples include:
•
•
•
Confidential
Charging in excess for services or supplies
Providing medically unnecessary services
Billing for items or services that should not be paid for by Medicare or Medicaid
20
Laws Created in Response to FWA
The False Claims Act:
• Prohibits any person from knowingly presenting or causing a
fraudulent claim for payment.
• Protects individuals who report noncompliance or FWA.
The Anti-Kickback Statute:
• Makes it a crime to knowingly and willfully offer, pay, solicit, or
receive, directly or indirectly, anything of value or remuneration to
induce or reward referrals of items or services reimbursable by a
Federal health care program.
Self-Referral Prohibition Statute (Stark Law):
• Prohibits physicians from referring Medicare or Medicaid patients to
an entity with which the physician or a physician’s immediate family
member has a financial relationship – unless an exception applies.
Confidential
21
Who commits fraud, waste, and abuse?

Unfortunately FWA is present in all corners of the health care
system. Here are some examples:
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Confidential
Beneficiaries or enrollees
Employees of health plans
Home health agencies
Hospitals
Laboratories
Medical equipment suppliers
Pharmacies
Pharmaceutical manufacturers
Pharmacy benefit managers
Physicians, nurses, and other health care providers
Brokers
Long-term care facilities
Personal Care Attendants (PCA)
Access Service Providers (e.g., interpreters and transportation
providers)
22
Examples of FWA (Prescriber)
 Illegal Payment Schemes
– Prescriber is offered, paid, solicits or receives unlawful payment to
induce or reward the prescriber to write prescription for drugs or
products.
 Script Mills
– Prescribers write prescriptions for drugs that are not medically
necessary, often in mass quantities, and often for patients that are
not theirs. These scripts are usually written, but not always, for
controlled drugs for sale on the black market, and might include
improper payments to the prescriber.
 Theft of Prescriber’s Drug Enforcement Agency
Number of Prescription Pad
– Prescription pads and/or DEA numbers stolen from prescribers.
This information could illegally be used to write prescriptions for
controlled substances or other medications.
Confidential
23
Examples of FWA (Wholesaler)
 Counterfeit, Impure Drugs through Black Market
• Black Market includes fake, diluted, expired, illegally imported drugs,
etc.
 Diverters
• Individuals who illegally gain control of discounted medicines and
mark up the prices and move them to small wholesalers.
 Inappropriate Documentation of Pricing Information
• Submitting false or inaccurate pricing or rebate information.
Confidential
24
Examples of FWA (Beneficiary/Enrollee)
 Identity Theft
• Using a member’s I.D. card that does not belong to that person to
obtain prescriptions, services, equipment, supplies, doctor visits,
and/or hospital stays.
 Doctor Shopping
• Visiting a number of doctors to obtain multiple prescriptions for
painkillers or other drugs. Might point to an underlying scheme
(stockpiling or black market resale).
Confidential
25
Examples of FWA (Pharmaceutical Manufacturer)
 Illegal Off-label Promotion
• Promotion of off-label drug use.
 Illegal Usage of Free Samples
• Providing free samples to prescribers knowing and expecting
prescriber to bill Medicare or Medicaid for the sample.
 Kickbacks, Inducements, Other Illegal Payments
• Inappropriate marketing or promotion of products reimbursable by
federal health care programs
• Inappropriate discounts or educational grants
Confidential
26
Examples of FWA (Plan Sponsor/Managed
Care Organization)
 Payments for Excluded Drugs
• Receiving payment for drugs not covered by the Plan Sponsor’s
Managed Care Organization’s formulary
 Marketing Schemes
• Offering beneficiaries a cash payment as an encouragement to enroll
in a Plan
• Unsolicited door-to-door marketing
• Use of unlicensed agents
• Enrollment of individual in a Medicare Plan without such individual’s
knowledge or consent
• Stating that a marketing agent/broker works for or is contracted with
the Social Security Administration or CMS
Confidential
27
Examples of FWA (Pharmacy Benefit Manager)
 Prescription Drug Switching
• PBM receives a payment to switch a beneficiary from one drug to
another or influence prescriber to switch patient to a different drug.
 Prescription Drug Splitting or Shorting
• PBM mail order pharmacy intentionally provides less than the
prescribed quantity, does not inform the patient or make arrangements
to provide the balance and bills for the fully-prescribed amount.
• Splits prescription to receive additional dispensing fees.
Confidential
28
Examples of FWA (Billing)
 Inappropriate Billing Practices
•
•
•
•
Confidential
Billing for services not provided
Misrepresenting the service that was provided
Billing for a higher level than the service actually delivered
Billing for non-covered services or prescriptions as covered items
29
Reporting Suspected or Actual FWA
 Report all suspected or actual
Fraud, Waste, and Abuse.
 Report all suspected or actual
noncompliance with regulations
 No business partner will suffer
any penalty or retribution for
reporting in good faith any
suspected misconduct or
noncompliance
You should know that:
 You are encouraged to speak to your
compliance lead, manager or human
resource representative about suspected
noncompliance or FWA
 Medica Medicare related incidents call
952-992-3400 or (toll free) 1-888-906-0972
 Medica’s department for handling FWA is
the Special Investigations Unit.
• 952-992-1736
• 1-800-458-5512 (option 1, option 8,
ext. 28478
• Or go to the Fraud and Abuse page
on Medica.com
 If you prefer to remain anonymous call
the Medica Integrity Line
• 1-866-595-8495
Confidential
30
Additional Resources
 Laws, regulations and
organizational policies
can be complex and can
sometimes be confusing.
While Medica believes that
employees and business
partners try to do what is
right, the right thing to do
may not always be clear.
We are all responsible for
compliance, and we are all
responsible for ensuring
that we follow the laws
and regulations that
govern our work.
Confidential
 CMS’ Prescription Drug Benefit
Manual – Chapter 9
•
http://www.cms.gov/Manuals/IOM/list.asp
 Code of Federal Regulations
• 42 CFR 422.503, and
• 42 CFR 423.504
•
http://www.gpoaccess.gov/cfr/index.html
 Office of the Inspector General
•
http://oig.hhs.gov/fraud/hotline/
 Minnesota Medicaid Surveillance
and Integrity Review Program
•
•
MN Rules 9505.2060 to 9505.2245
https://www.revisor.mn.gov/rules/?id=9505
31
Training Completed
Congratulations! You have completed the
compliance and fraud, waste, and abuse training.
Confidential
32
Sample Training Log
Employee Name
Confidential
Name of Training
Date
Employee
Signature
33